Press Stakeout with Senator Mitch McConnell (R-KY), Senate Minority Leader

Press Conference

PRESS STAKEOUT WITH SENATOR MITCH MCCONNELL (R-KY), SENATE MINORITY LEADER

SUBJECT: PRESIDENT OBAMA'S ECONOMIC RECOVERY PLAN

ALSO PRESENT: SENATOR JON KYL (R-AZ), MINORITY WHIP; SENATOR LAMAR ALEXANDER (R-TN), CONFERENCE CHAIR; SENATOR JOHN ENSIGN (R-NV), POLICY COMMITTEE CHAIR; SENATOR JOHN THUNE (R-SD), CONFERENCE VICE CHAIR

Copyright ©2009 by Federal News Service, Inc., Ste. 500, 1000 Vermont Ave, Washington, DC 20005 USA. Federal News Service is a private firm not affiliated with the federal government. No portion of this transcript may be copied, sold or retransmitted without the written authority of Federal News Service, Inc. Copyright is not claimed as to any part of the original work prepared by a United States government officer or employee as a part of that person's official duties. For information on subscribing to the FNS Internet Service at www.fednews.com, please email Carina Nyberg at cnyberg@fednews.com or call 1-202-216-2706.

SEN. MCCONNELL: Good afternoon. I think you've had a chance to ask all the process questions of the Democratic leader. Let me deal with the larger question. We spent a lot of time talking about the trees here. Let's talk about the forest. How much are we spending? And how unprecedented is it for our country?

For years, in civic club audiences, I've always talked about America this way, that typically around 20 percent of our gross domestic product has been government spending. Traditionally in recent years, in France, it's over 50 percent. In Italy and Germany, it's about 45 percent.

So a way of looking at what we're in the process of doing here is to look at what the percentage of our gross domestic product government spending will be, if we take all of the steps that we now anticipate we're taking.

To put it in context, from 1983, during the first Reagan administration, down to 2000, where you had Republicans either in the White House or for most of the time in control of Congress, we drove government spending, as a percentage of gross domestic product, from 23.5 percent down to 18.4 percent, again roughly in this range of 20 percent.

In 2008, after the Bush years, it had jagged back up some to 20.9 percent of government -- of the GDP was government spending. So you can see, been relatively steady around 20 percent, sometimes up a little bit, sometimes down a little bit.

It's anticipated if all of these new spending items that we're in the process of considering go through, that government spending in this country as a percentage of gross domestic product in 2010 could well be just under 40 percent; just under 40 percent if we do all of these -- take all of these measures that we're talking about.

This paints a picture of the Europeanization of America. And I know there are many people on the other side who think the French and the Germans and the Italians have got it right, but by maintaining a percentage of GDP and government spending of roughly 20 percent, we continue to have a vibrant private sector.

And we all know this is an emergency. We're all in favor of taking some kinds of action. But I do think it's important to focus on the larger question of where are we going to leave the country. In two years, if we take all of these steps, we will have made a dramatic move in the direction of, indeed, turning America into Western Europe.

SEN. KYL: There's been a false choice presented that Republicans need to accept this bill; it's the only choice. In other words, it's either do nothing or accept this bill. Of course, that's a false choice.

Republicans believe we need to do a lot, but that this legislation needs to be changed a lot in order, first of all, to avoid the problem that Senator McConnell spoke of and, secondly, to avoid spending billions of dollars in more wasteful Washington spending.

The importance of what Senator McConnell talked about is what CBO designated as the crowd-out effect in the private sector, where borrowing would become much more expensive and, they predict, in 10 years we would see declines in the gross domestic product.

In other words, but for this legislation, CBO says we would be increasing our GDP. This legislation will cause a one-tenth to three- tenths reduction in the GDP because of the amount of spending.

And the other aspect is what the money is spent on. President Obama said that all of the earmarks should be stripped from the legislation. Have they been? No. I'm just going to cite a few of them.

Here's a $2 billion earmark for FutureGen near-zero-emissions power plant in Mattoon, Illinois. That's an earmark. Two hundred million dollars for workplace safety at USDA facilities; $200 million for public computer centers at community colleges and libraries. Ask yourself with each of these, how many jobs do they create?

The $650 million for the DTV transition coupon program. This is a good idea, by the way -- $10 million to fight Mexican gun runners. But shouldn't it be in the regular appropriation process?

Ten million dollars for urban canals; $198 million to design and furnish the DHS headquarters; $500 million for state and local fire stations. I know folks out in Arizona would like to have some new fire stations, but is that the right expenditure for the so-called stimulus money?

A hundred and sixty million dollars for volunteers at the Corporation for National and Community Service. These are volunteers, not paid folks.

The point here is that there are a lot of earmarks and a lot of wasteful Washington spending in this bill. And so because of the macro point that Senator McConnell made and sort of the micro point I'm making here -- please understand this is not a choice between doing nothing and doing the bill that's before us. It's a choice between doing something smart that will create jobs and won't add a mountain of debt into this country and won't waste taxpayer dollars, on the one hand, in passing the wasteful, costly bill that the Democrats have passed.

SEN. ALEXANDER: "We won the election, we'll write the bill" is not the kind of change that I think most Americans expected after the last election. And it's not the kind of attitude on the part of the majorities that will help solve the major problems facing our country.

You know, President Bush technically, as commander in chief, could wage the war in Iraq without congressional broad support for that, but it made for a difficult presidency and it made the war harder. This president can pass a few pieces of legislation with no real effort and no real result in terms of getting Republican ideas into the legislation, but it is not the way to get the country moving again.

This was the easy piece of legislation, and we saw almost no opportunity for the Democrats to take the Republican focus on housing, on tax cuts, on limiting spending only to those items that created jobs, very little opportunity to get that into the bill, and so we have the result we have.

But next we have banks. And next we have housing. And next we have entitlements. And next we have health care.

And this is not a good beginning, to try to begin to have the kind of bipartisan framework most of us want in order to move the country in the direction it needs to go.

SEN. ENSIGN: I want to make a couple of points about transparency. This new president and the Democrat Congress have promised transparency and accountability. What we're challenging the Democrat Congress to do is to televise the conference meetings. When they're working out the difference between the House and the Senate, it should not be behind closed doors. It should be out in the open, where you all will have access. You'll be able to hold them accountable. You'll be able to find out, you know, if there are things being hidden in the bill at the last minute; you know, who's being done favors, if there are special things being put into the bill.

That's what Americans want. They want transparency and accountability from their government.

They want transparency and accountability from their government. And when you're spending a trillion dollars, it's even more important to have this kind of transparency and accountability.

So we're calling on the Democrats to let's televise these meetings so, you know, these things aren't done in some back room someplace with very, very little input and accountability to the public.

Second point I'd make on transparency is Secretary Geithner came out with a new proposal today. And they're talking that they're not asking for any more money, but they're going to leverage -- the Federal Reserve is going to leverage some of this money. Well, how much is the Federal Reserve going to leverage? That's unknown. Why is it unknown? Because there's no transparency or accountability with the Federal Reserve. The reports out there right now are somewhere -- 1 trillion (dollars), 2 trillion (dollars), $3 trillion that the Federal Reserve has already infused into this marketplace today.

And by the way, this is the American taxpayer. We have to hold -- if we're going to hold accountable the Federal Reserve, we have to have transparency. And so as we're going forward, I think it's a good idea to open up that process to say to the Federal Reserve, let's see what you are actually doing in the marketplace so that the American people can share, because the American people are the ones who are on the hook if the Federal Reserve causes inflation, causes credit problems for the United States. So these folks who are unelected at least should be transparent so that some accountability can be there in the process.

SEN. THUNE: Well, I think we all -- everything's been said. I just think that the argument that we made on the floor the last week and this week was that this spends too much and doesn't do enough. And I think the numbers bear that out. And the compromise that supposedly was agreed upon actually made the bill larger, not smaller.

My guess is it gets even larger when it goes into the conference. And I think the thing the American people find most offensive about this is the wateful spending. It's the pork. It's the things that Jon Kyl just mentioned that don't do anything to stimulate the economy.

And secondly, a lot of these things are going to go on for some time into the future. These are permanent things; these aren't one- time things. A lot of the mandatory spending, the entitlement spending in this bill and new programs that are created that should be done in regular order are going to create liabilities for years to come, which is why, I think, the CBO found that this is going to have a dilutive effect on GDP in the out-years.

So this was the wrong direction to go. Republicans prevent -- presented what I thought were a number of good alternatives last week, which cost considerably less, were more focused, more targeted on the whole issue of job creation. Regrettably, a lot of those amendments were defeated. But we think this is a great debate to have. The American people, I think, are tuning in. And I think that they -- the more they learn about this bill, the more objections they're going to raise against it as well.

SEN. MCCONNELL: John (sp)?

Q Mr. McConnell, I wondered if you think that the group of moderates -- if you think that Senators Collins and Specter did anything at all to improve this bill -- obviously not enough, anywhere near, to get your support, but did it get any better? And do you have faith in their ability to hold the conference's feet to the fire not to simply put back in what they managed to take out?

SEN. MCCONNELL: Well, I -- obviously, whatever changes were made were not satisfactory to the balance of my conference. I think there are 219 Republicans in Congress right now. Only three found the bill acceptable. The rest of us did not. We think, as we have repeatedly said, that it's entirely too large, entirely too untargeted. And more than anything else, it's not timely, it's not temporary and it's not targeted, which I -- to me fails the test of what a stimulus package ought to be.

Q Do you have any thoughts on the majority leader appointing himself to the conference, particularly given the concerns many Republicans had about the level of input that the leaderships on both sides had in the drafting of the original measures?

SEN. MCCONNELL: It's a vote he should be able to depend on. (Chuckling.)

Q Anything else?

SEN. MCCONNELL: I don't have any problem with it, no.

Q Senator McConnell?

SEN. MCCONNELL: Yeah.

Q How worried are you about this scenario repeating itself, where you have two or three members who pair up with a moderate on the other side, and this repeating itself throughout the year?

SEN. MCCONNELL: Well, most of you have been around Congress for a while.

As you know, we have a pretty diverse conference ideologically. And I think it is safe to say that Republicans in the Northeast are not exactly the same as Republicans in the Deep South. The voting behavior I don't think has changed much from the way it was in the last Congress. What's changed is that 49 is more than 41.

Q As a follow-up, did Senator Collins let you know what she was doing? Did she reach out to you?

SEN. MCCONNELL: She has been very open with all of us. I think there are no complaints about our colleague, in terms of letting us know what she was up to and what her thoughts were.

Q Senator, the president is really clear on why he wants this bill to pass and the positive effect he thinks it will have. You guys obviously don't like this bill. Can you talk about what you think will be, I'm assuming, a negative outcome from the bill? Or do you just think it will have a neutral effect? It won't do anything positive or negative.

SEN. MCCONNELL: Well, I mean, if you spend a trillion dollars, it might have some impact somewhere. But on a cost-benefit ratio, what I'm telling you is that the vast majority of Republicans, in the House and Senate, feel that this measure is not timely, temporary or targeted.

The best evidence of that is, there's almost $200 billion in there in increase in permanent spending, permanent increases in spending. We would have done the job by spending a lot less, as all of my colleagues have pointed out, by targeting the housing problem first.

Target the housing problem first. Put more money back into people's pockets. We simply don't believe they've gone about this in the appropriate way.

Q Is the economy then going to suffer because of the passage of this bill?

SEN. MCCONNELL: Well, we'll all find out, won't we? I mean, I think, even the advocates of this plan are unclear about what its outcome may be.

Q Senator McConnell, could you comment on the TARP -- (off mike) -- outlined by Treasury Secretary Geithner? (Off mike.)

SEN. MCCONNELL: No, I really can't because I didn't see the announcement. But we know that that's the next wave of spending that's coming, which probably will not be confined to the second tranche of TARP.

Q Along those lines, Senator Ensign, you said you thought the Fed could be more transparent.

Could you give us some more details about what you'd like to see the Fed do?

SEN. ENSIGN: Well, I'd like to have the Fed be more transparent with where the money is going. How are they leveraging? What have they done so far in the marketplace?

Like I said, the Fed right now has basically been printing money. They know we -- you know, the reports are literally anywhere from 1 trillion (dollars) to $3 trillion. Well, if they're going to take and leverage the money in the TARP, you know, how are they going to do that? What processes are in place so that we can have more transparency, so we can see, you know, what is working?

You know, the bottom line is we are going through a period now that some day people may be looking back on: what was done, what wasn't done. And if there's no transparency, folks in the future won't be able to learn from what we're doing today.

So we need to have transparency and accountability at all levels of our institutions. And the Federal Reserve, while it's a, quote, private federal reserve, who's left holding the bag is the American people. If they print too much money, and we end up with hurting the ratings for the United States Treasury bills, the American people are the ones who are going to suffer because of that. And that's why there needs to be accountability and transparency in this process.

Q Okay. Thanks.

SEN. ENSIGN: Thanks.

END.

Source